The article explains the recent push for investment advisors to increase cybersecurity prevention by the Securities and Exchange Commission (SEC). Between 2012 and 2013, several banking websites were disabled by hackers, leading to the eventual enactment of Executive Order 13636, “Improving Critical Infrastructure Cybersecurity.” This order is designed as an “attempt to improve the nation’s infrastructure to prevent and detect cyber risk by keying in on critical participants in the U.S. economy and requesting that they adopt comprehensive cybersecurity practices.” Additionally, the National Institute for Standards & Technology (NIST) was appointed to oversee and develop what would eventually become the “voluntary cybersecurity framework.”

The design of NIST’s framework is broken into three sections: the Core, the Tiers and the Profile. The Core provides guidance for creating an organizational profile for a business, as well as outlining options for putting together cybersecurity agendas. The Tiers, or Implementation Tiers, are a series of four designations, or “tiers,” that characterize a business’ practices, which will help inform the best possible cybersecurity plan necessary. Finally, the Profile is the grading system that a business can use to compare its current cybersecurity process against its planned one.

Mr. Kvitka and Mr. Schatzow strongly encouraged any investment advisors without a cybersecurity process in place to begin the steps to implementing one.

]]>http://www.njlawblog.com/2015/07/articles/stark-news/why-cybersecurity-matters-for-investment-advisors/feed/0http://www.njlawblog.com/2015/07/articles/stark-news/why-cybersecurity-matters-for-investment-advisors/Tax Liability of Environmentally Contaminated Industrial Property – 2015 Updatehttp://feeds.lexblog.com/~r/NewJerseyLawBlog/~3/Jdn2q77k3vg/
http://www.njlawblog.com/2015/07/articles/tax-appeals/tax-liability-of-environmentally-contaminated-industrial-property-2015-update/#commentsThu, 30 Jul 2015 13:54:41 +0000Marshall T. Kizner]]>http://www.njlawblog.com/?p=9707Continue Reading]]>In a recent New Jersey Tax Court decision, Methode Electronics, Inc. v. Twp. Of Willingboro, the court ruled that the assessment of a contaminated piece of property, which was not developable and could not be developed in the foreseeable future, should be reduced to a nominal valuation.

Methode involved an industrial property where printed circuit boards and airbag components were manufactured for nearly twenty years. As a result of this activity, the property became contaminated with volatile organic compounds and metals. The property owner ceased operations in 1999 and no other businesses have operated at the property since that time. The building was demolished, except for a concrete slab that served as the floor for the facility. The slab was left in place to prevent the off-gassing of toxic vapors from soil and groundwater.

Improvements on the property consisted of a groundwater treatment system consisting of a number of monitoring wells, which were required to be put into the property by the New Jersey Department of Environmental Protection (“DEP”). A small building was constructed by the taxpayer in order to house the groundwater treatment equipment. Additional improvements consisted of the parking lot and loading area previously associated with the facility.

Significantly, the monitoring wells were required to remain in place indefinitely. Along these same lines, the floor slab was also required to remain in place indefinitely pursuant to a remediation plan agreed to by the taxpayer and DEP.

The Tax Court agreed with the tax payer’s position and reduced the assessment to a nominal sum ($2,000). The court reasoned that the DEP regulation of the property and remediation plan “severely limits the utility of the parcel.” The property had no use and could not be developed for the foreseeable future.

In previous cases involving environmental contamination, courts have recognized that contaminated property for which there was no identifiable market could have a “value in use” to the owner of the facility, as long as property remained operational. Under those circumstances, normal assessment techniques were deemed appropriate. Regarding the impact of the cleanup on the value of the assessment, the cost to cure the contaminated property should be treated as a capital improvement and depreciated over the beneficial life of the property. See Inmar Assocs., Inv. v. Borough of Carlstadt, 112 N.J. 593 (1988). Following Inmar, tax courts have applied their specialized knowledge and expertise to calculate adjustments on a case by case basis in this scenario.

In a more recent decision, Orient Way Corp. v. Township of Lyndhurst, 27 N.J. Tax 361 (Tax 2013), the Tax Court deviated from the methodology of Inmar in a case where a sophisticated seller and a sophisticated buyer, who were aware of contamination on the property and the estimate of clean-up costs, freely negotiated a sale price for the property shortly before the relevant date of valuation. In that case, the court adopted the sales price as the true market value of the property.

Methode was distinguished from Inmar (and its progeny) and Orient Way, because the subject property could not be remediated for an indefinite period of time, and there was no identifiable market.

The Methode case demonstrates the importance of understanding the nuances involved in appealing property taxes for a contaminated piece of property in the State of New Jersey. If you are considering filing an appeal for industrial or commercial property, it is recommended that you consult with experienced legal counsel who can guide you through the process.

]]>http://www.njlawblog.com/2015/07/articles/tax-appeals/tax-liability-of-environmentally-contaminated-industrial-property-2015-update/feed/0http://www.njlawblog.com/2015/07/articles/tax-appeals/tax-liability-of-environmentally-contaminated-industrial-property-2015-update/Craig S. Hilliard and ABPIA Win $2.2 Million Against Bridal and Prom Counterfeitershttp://feeds.lexblog.com/~r/NewJerseyLawBlog/~3/ATUWF5GkBHU/
http://www.njlawblog.com/2015/07/articles/stark-news/craig-s-hilliard-and-abpia-win-2-2-million-against-bridal-and-prom-counterfeiters/#commentsWed, 29 Jul 2015 14:13:45 +0000Stark & Stark]]>http://www.njlawblog.com/?p=9705Continue Reading]]>Craig S. Hilliard, Shareholder at Stark & Stark, representing the American Bridal & Prom Industry Association (ABPIA) recently received final judgments in several federal lawsuits against various international bridal and prom counterfeiters. These judgments were issued throughout the month of June and brought an end to more than two years of litigation.

The ABPIA commenced these lawsuits in late 2012, by filing against over 1500 different websites engaged in the sale of counterfeit products to unsuspecting customers. The ABPIA was represented by Mr. Hilliard, who is a member of Stark & Stark’s Litigation and Intellectual Property groups, where he concentrates his practice in the area of federal civil litigation. Mr. Hilliard has been representing the ABPIA since its inception.

Early on in the lawsuits, the ABPIA was successful in disabling the counterfeiters’ websites and seizing assets, located primarily in PayPal accounts. With the final decision, these websites and their domains were permanently shut down and transferred, along with the remaining assets, to the ABPIA. These assets totaled about $2.2 million.

“This decision is a landmark for our organization,” said Stephen Lang, ABPIA’s President and CEO of Mon Cheri Bridals, LLC. “But it’s only the first step in an aggressive path we are taking to cut off the flow of counterfeit formalwear products into this country, because those fake goods harm both consumers and the legitimate designers and manufacturers who invest millions each year in offering their creative work to those consumers. With these recent victories, the ABPIA will be intensifying its efforts in the coming months to battle counterfeits, educate consumers about the dangers of counterfeit products and work with the state and federal agencies and legislators to both enforce and improve the laws protecting customers and designers.”

The ABPIA is a not-for-profit organization founded in July 2012, and since its creation, has gained over 400 members, who include the designers, manufacturers, retailers and others in the formalwear industry. The organization was started with the goal of combating formalwear counterfeiters, which have become a growing threat since the advent of the Internet.

]]>http://www.njlawblog.com/2015/07/articles/stark-news/craig-s-hilliard-and-abpia-win-2-2-million-against-bridal-and-prom-counterfeiters/feed/0http://www.njlawblog.com/2015/07/articles/stark-news/craig-s-hilliard-and-abpia-win-2-2-million-against-bridal-and-prom-counterfeiters/Negotiating Summer Vacation Schedules: Divorced Parents’ Tug-of-Warhttp://feeds.lexblog.com/~r/NewJerseyLawBlog/~3/oVoXm2mErbU/
http://www.njlawblog.com/2015/07/articles/divorce/negotiating-summer-vacation-schedules-divorced-parents-tug-of-war/#commentsMon, 27 Jul 2015 15:03:35 +0000John S. Eory]]>http://www.njlawblog.com/?p=9702Continue Reading]]>The start of summer can be a joyous occasion for many—the warm weather heralds the start of vacations, as well as summer break for children. Unfortunately, the start of summer vacations can be particularly aggravating for divorced parents. The issue of vacations and breaks are a perennial issue between some contentious divorced parents, as one parent seeks to deny or limit the other parent’s vacation with their children. The problem is especially difficult if international travel is involved.

In a decision issued on June 17th, the Hon. Lawrence Jones, J.S.C., dealt with such matters in the context of a mother’s proposed trip to Holland with the parties’ son to visit his maternal grandparents. The mother wanted the child to stay with his grandparents for an additional seven weeks after their two-week vacation, which would have deprived the father of summer parenting time. Unsurprisingly, the father objected, but in doing so sought to bar the two-week vacation on the basis that his ex-wife posed a flight risk. When presented with these troubled facts, Judge Jones found both parties positions to be unreasonable and allowed the two-week vacation, but, however, denied the additional seven weeks sought by the mother.

The court then had to deal with the father’s refusal to sign U.S. State Department form DS-3053 (the child’s passport application) and, while acknowledging that it could not force him to sign the form, granted the mother’s request for power of attorney to apply for the passport without the father’s consent. This thereby allowed the mother to take her son on the international vacation, but with the understanding that afterward he would return to the U.S. for the rest of his summer break.

Although the above facts were unique, Judge Jones’ decision squarely addressed the troublesome area of summer vacation time and highlighted the court’s inherent equity power to achieve a fair result.

Pope Francis is coming to Philadelphia in September. The visit will attract millions of visitors from around the world. A quick look at prior Pontiff visits shows the enormous influx of people that the Pope attracts to other global cities:

Many commercial, retail and other property owners are now planning to benefit from the multitude that come to see the Pope when he visits the United States in September. Currently, the Papal itinerary has him in Washington, D.C., New York, and Philadelphia.

Bigger Economic Impact than the Super Bowl

Tourism officials and business leaders are also excited by the ripple-effect from this rare event.

“This is a once in a lifetime event,” said Jack Ferguson, president and CEO of the Philadelphia Convention & Visitors Bureau. “You’re talking about millions of people coming in very quickly, and creating a demand in a very compressed period of time. This absolutely will push out into the suburbs.”[2]

In Philadelphia alone, the Pontiff’s visit is expected to generate $418 million in economic benefits to the region, including restaurant outings, hotel stays, retail purchases, etc. To give this some context, the bannered “biggest sporting event in the world” the Super Bowl, only generates only about $200 million.[3] When the Pope visited South Korea in 2014, the visit generated more than $491 million.[4]

The Southeastern Pennsylvania Transportation Authority is projecting up to 700,000 passengers each day during the Pope’s visit, and Amtrak will require reservations for the Papal visit. Businesses that will benefit include hotels, bed and breakfasts, and other businesses in the hospitality industry. There are not enough rooms in Philadelphia to accommodate all of the visitors, which means additional opportunities for surrounding communities, including communities in New Jersey and the surrounding region. The demand is so great that people are now offering to host out-of-town guests for a fee.

Restaurants, caterers, and vendors will feed the hungry crowds and provide beverages. Retailers will supply the masses. Other businesses and attractions will provide entertainment and activities. This visit presents a once in a lifetime opportunity to welcome travelers and encourage them to return.

Have You Prepared to Maximize the Benefits for Your Retail Business?

In order to maximize the benefits of the Pope’s visit, it is important to plan now. The Pontiff will only be here for a short time, and it’s just around the corner. Are you and your company ready to meet this once in a lifetime opportunity? It is important to discuss your commercial, retail, and other property needs with experienced counsel to achieve your goals. Don’t delay. The visit is only a few months away.

]]>http://www.njlawblog.com/2015/07/articles/commercial-retail-industrial-real-estate/papal-visit-to-philadelphia-positive-economic-opportunities-for-commercialretail-owners/feed/0http://www.njlawblog.com/2015/07/articles/commercial-retail-industrial-real-estate/papal-visit-to-philadelphia-positive-economic-opportunities-for-commercialretail-owners/Tax Appeals: The Silent Killerhttp://feeds.lexblog.com/~r/NewJerseyLawBlog/~3/6bQ6eM9-h1Y/
http://www.njlawblog.com/2015/07/articles/tax-appeals/tax-appeals-the-silent-killer/#commentsThu, 23 Jul 2015 13:13:03 +0000Timothy P. Duggan]]>http://www.njlawblog.com/?p=9684Continue Reading]]>It is crucial for owners and other taxpayers of commercial, industrial, retail and other income producing properties to be on the lookout for the “Silent Killer” of tax appeals, commonly known as Chapter 91 requests. New Jersey law permits a municipality to request income and expense statements from owners of income producing properties on an annual basis (N.J.S.A. 54:4-34). The request (referred to as a Chapter 91 request) must be made in writing, served by certified mail, and must enclose a copy of the statute providing the authority to make the request. A property owner has 45 days to respond to the Chapter 91 request or risk having a subsequent tax appeal dismissed by the County Tax Board or New Jersey Tax Court.

Property owners should be aware of the following:

Now is the time to be on the lookout for Chapter 91 requests since many tax assessors mail the requests during the summer. If tax bills are sent to a location outside of New Jersey (ie., accounts payable department located at corporate headquarters), it is advisable to make certain that the Chapter 91 request is sent to the person responsible for completing the request immediately.

Complete the entire form accurately. If a form is not complete or is misleading, the tax appeal may still be dismissed.

Although the statute appears to limit the request to income producing properties, that can be misleading. For example, an owner-occupied office building can be considered “income producing” in this situation. Also, if the property was income producing in a particular year, and vacant the following year for renovations, the property owner should still complete the form and advise the tax assessor that the property is now vacant. Also, inter-company leases or arrangements need to be disclosed. When in doubt, send in a response.

When responding to the Chapter 91 request, file the response to the tax assessor (not the township attorney) via certified or registered mail, overnight delivery service or in person so it is received within 45 days. There have been numerous cases where property owners allege they mailed their response, but the municipality denies receiving the response. In those circumstances, the Court is often required to hold an expensive plenary hearing to hear the testimony of the property owner and municipal assessor in order to decide whether the response was mailed. This is a costly way to start a tax appeal and can be avoided by obtaining a certified mail receipt.

While an assessor of any municipality can serve a Chapter 91 request, taxpayer vigilance is particularly key in municipalities undergoing a revaluation. In Central New Jersey, Hamilton Township, Plainsboro, Trenton and possibility Ewing Township are in the process of completing revaluations. If the revaluations are completed in 2015, virtually every tax assessment in these municipalities will change in 2016. In order to make certain you preserve your right to appeal your 2016 tax assessment, make certain you comply with any Chapter 91 requests in a timely manner. Failure to do so may result in a high tax bill in 2016, with no recourse.

]]>http://www.njlawblog.com/2015/07/articles/tax-appeals/tax-appeals-the-silent-killer/feed/0http://www.njlawblog.com/2015/07/articles/tax-appeals/tax-appeals-the-silent-killer/Preserving Assets of an Estate During a Will Contesthttp://feeds.lexblog.com/~r/NewJerseyLawBlog/~3/F7an9Rf3pvs/
http://www.njlawblog.com/2015/07/articles/probate-litigation/preserving-assets-of-an-estate-during-a-will-contest-2/#commentsTue, 21 Jul 2015 19:14:09 +0000Paul W. Norris]]>http://www.njlawblog.com/?p=9682Continue Reading]]>If you are at the point that you have decided to contest a Will, there is often a concern that the assets of the Estate may be depleted by the current beneficiaries under the disputed Will pending the disposition of the case. This concern is often present in probate litigation, as if a beneficiary were to receive Estate assets without Court imposed restraints this party would be free to convert and dispose of same. As such, it is common practice for attorneys in probate litigation to seek the imposition of preliminary restraints and/or temporary restraints pending the resolution of a Will Contest.

The imposition of preliminary or temporary restraints is called Injunctive Relief. The purpose of Injunctive Relief in the context of probate litigation is to preserve the assets of the Estate and to maintain status quo with regard to both tangible and intangible assets, and furthermore, to prevent the distribution of assets from the Estate pending the resolution of the matter.

The standard for obtaining Injunctive Relief is typically a four part test. The first prong of the test is to determine whether the party who is seeking the relief would suffer irreparable harm if the restraints are not granted. The next part of the test concerns whether the party who seeks the Injunctive Relief has a reasonable probability of ultimate success on the merits. This means that there must be some demonstration of a valid and reasonable claim asserted by Plaintiff. The next prong of the test would be to determine whether the restraints would cause an undue burden upon the person who would be subject to the restraints. The final part of the test is to determine whether it is in the public interest to grant the restraints which have been requested. Typically, in reviewing such an application the Court will place the most weight upon the first two prongs of the test. Recent decisions by the Appellate Division, however, have rendered the probability of success prong less crucial in determining whether injunctive relief should be issued. As a result, the Courts are now more inclined to preserve the status quo of the Estate pending the disposition of a matter on its merits.

As discussed above, it is important that if a party is considering contesting a Will and there are concerns that the Estate may be converted or wasted while the matter is pending, that Injunctive Relief be sought by their attorney to preserve the Estate until the matter can be fairly decided on its merits. This Relief may protect the party’s interest so that the matter can be fully and fairly decided. Obviously, the process is technical and any party who wishes to obtain this relief in the context of a Will Contest should seek the guidance and assistance of an experienced attorney.

]]>http://www.njlawblog.com/2015/07/articles/probate-litigation/preserving-assets-of-an-estate-during-a-will-contest-2/feed/0http://www.njlawblog.com/2015/07/articles/probate-litigation/preserving-assets-of-an-estate-during-a-will-contest-2/How Cohabitation Affects Alimony Paymentshttp://feeds.lexblog.com/~r/NewJerseyLawBlog/~3/OgUEva6zZ2E/
http://www.njlawblog.com/2015/07/articles/divorce/how-cohabitation-affects-alimony-payments/#commentsTue, 21 Jul 2015 12:30:27 +0000Megan E. Smith]]>http://www.njlawblog.com/?p=9677Continue Reading]]>At the conclusion of many divorce proceedings, alimony is calculated by the court to be paid from the supporting spouse to the dependent spouse. The amount of alimony to be paid is calculated based on a variety of factors, including, among others, the length of the marriage and the martial lifestyle of the couples while married. Once calculated, alimony can typically only be modified by showing a “change in circumstances” that would warrant either the increase or decrease in alimony payments to be made. An occurrence that can be considered a “change in circumstance” is when the alimony recipient then cohabitates with another following the divorce while still receiving alimony payments.

Cohabitation situations can be frustrating to the alimony obligor (the spouse making the payments) because the alimony recipient cohabitating with another can mean two things: (1) the recipient may be using the payments to support their new partner, or (2) the recipient may be receiving financial support from their new partner in addition to the alimony received from their former spouse, essentially receiving monies from two different sources and concealing changes in their finances.

How does the law define cohabitation?

In New Jersey, there are both judicial opinions as well as legislation that have defined what constitutes cohabitation. First, in Konzelman v. Konzelman, the New Jersey Supreme Court explains that cohabitation involves an intimate, close and enduring relationship, requiring more than a common residence or mere sexual liaison. It involves conduct whereby the couple has undertaken duties and privileges that are commonly associated with marriage. In addition to long-term intimate or romantic involvement, indicators of cohabitation may also include living together, intertwined finances, the sharing of living expenses, and the recognition of a relationship in the new couple’s social and family circle.

Following Konzelman, the New Jersey Legislature adopted the Alimony Reform Act in 2014, borrowing some of the factors defining cohabitation from Konzelman. The Alimony Reform Act listed the following eight factors as indicators of cohabitation for the purposes of alimony modification:

Intermingled finances;

Shared responsibility for living expenses;

Recognition in the new couple’s family and social circle of a relationship;

Living together and frequency of contact;

Shared household chores;

An enforceable promise of support;

Relationship’s length; and,

Any additional relevant evidence.

How does one go about proving cohabitation?

If a recipient spouse is benefitting from cohabitation, it is unlikely they will freely admit that they are essentially “double-dipping” (taking from the former spouse as well as their new partner). Therefore, the supporting spouse, through their attorney, could hire a private investigator to monitor the recipient in an attempt to prove cohabitation. Through the investigator, a variety of evidence could be gathered to show that cohabitation is in fact taking place. While evidence gathered through a private investigator is often circumstantial and only paints an incomplete picture, it could be enough to persuade a judge that alimony modifications are necessary. You should seek a referral from an attorney or another professional when selecting a private investigator as the resulting report and underlying investigation are keys in proving cohabitation.

Once cohabitation is established, the dependent ex-spouse has the burden of proving that they are still dependent on the alimony that they had been receiving even though they are cohabitating with another. When a dependent spouse economically benefits from cohabitation, their support may be reduced or even terminated. A reduction in support is typically appropriate when the dependent spouse shows that they still have some need for support even considering the new support they receive from their new partner.

What are the factors that trigger the termination of alimony versus the reduction of alimony?

In a recent New Jersey Appellate Division case, Reese v. Weis, the court terminated the alimony paid to a dependent spouse due to cohabitation. The factors that the court applied to determine alimony termination was appropriate (instead of reducing alimony) can be summarized as the following:

When the dependent spouse cannot prove a continued need for support;

When the dependent spouse is receiving a direct economic benefit from their new partner;

When the dependent spouse is receiving indirect financial support (such as gifts) that enhance their quality of life; and,

When the ex-spouse and their new partner have been together for a longer period of time than the previous relationship.

These factors can be critical in a judge deciding to reduce alimony to a dependent spouse versus alimony being completely terminated.

Every cohabitation scenario is different, just like every divorce is different. Your attorney will need to analyze the specific facts of your case to ensure that alimony is modified properly in a cohabitation situation.

]]>http://www.njlawblog.com/2015/07/articles/divorce/how-cohabitation-affects-alimony-payments/feed/0http://www.njlawblog.com/2015/07/articles/divorce/how-cohabitation-affects-alimony-payments/Get that Divorce Agreement in Writing!http://feeds.lexblog.com/~r/NewJerseyLawBlog/~3/lc1MISzAyEg/
http://www.njlawblog.com/2015/07/articles/divorce/get-that-divorce-agreement-in-writing/#commentsMon, 20 Jul 2015 13:43:05 +0000John S. Eory]]>http://www.njlawblog.com/?p=9674Continue Reading]]>In a case decided by the Appellate Division on July 15 (A.F v. P.F.; full names redacted), the Court emphasized the importance of reducing divorce agreements to writing in order to be deemed enforceable. In this case, while at the Courthouse, the parties reached what their lawyers labeled a “Partial Agreement” that needed to be “cleaned up.” In reliance on this representation, the Judge scheduled the case for an uncontested hearing. The conversion of this draft agreement did not occur. Instead, one of the parties sought to enforce the “Partial Agreement.”

With what the Appellate Court described as “an abundance of caution,” the Judge permitted the party seeking enforcement to testify as to why the document should be considered binding. The Judge found that it was not entitled to enforcement and an appeal followed. The Appellate Division affirmed the Judge’s findings that there had been “no meeting of the minds” between the parties.

This case points out the importance of having divorce settlements properly memorialized since, as in the above case, the document in question was insufficient. No settled divorce should be finalized without a comprehensive, written Marital Settlement Agreement, as opposed to a working draft, memorandum of understanding or the like which will lead to misunderstanding and litigation.

]]>http://www.njlawblog.com/2015/07/articles/divorce/get-that-divorce-agreement-in-writing/feed/0http://www.njlawblog.com/2015/07/articles/divorce/get-that-divorce-agreement-in-writing/“White Collar” Workers Get a Raise: Changes to the Exemption under the FLSAhttp://feeds.lexblog.com/~r/NewJerseyLawBlog/~3/8ry1HAb_JJY/
http://www.njlawblog.com/2015/07/articles/employment/white-collar-workers-get-a-raise-changes-to-the-exemption-under-the-flsa/#commentsFri, 17 Jul 2015 17:02:59 +0000Benjamin E. Widener]]>http://www.njlawblog.com/?p=9671Continue Reading]]>Arguably the most important law guaranteeing a worker’s right to fair pay is the federal Fair Labor Standards Act of 1938 (“FLSA”), which defines the forty hour workweek, sets the federal minimum wage, establishes requirements for overtime pay, establishes recordkeeping requirements for employers, and places restrictions on child labor. In addition, the FLSA requires employers to pay employees overtime (1 and ½ times their regular rate of pay) if they work over 40 hours in a single work week.

Employers often mistakenly believe that just because their employees are salaried, and not wage earners, then the employer is immune from paying overtime and those employees are automatically exempt from the FLSA overtime requirement. However, that’s not true. There are categories of employees who are exempt from receiving overtime pay, but that is dependent on the unique circumstances of the employment. For example, certain administrative, executive, professional and highly compensated employees may not be entitled to receive overtime pay—but even that might be changing soon.

On June 30, 2015, the United States Department of Labor (“DOL”) announced its proposed revisions to the overtime exemptions for “white collar” employees, i.e. those holding executive, administrative and professional jobs. The last time the FLSA was updated was in 2004, which established a salary threshold for the white collar exemption at $455/week ($23,660/year). The DOL’s new proposal doubles this salary threshold. Specifically, in order for an executive, administrative or professional employee to be exempt from overtime, at a bare minimum the employee must be salaried “at the 40th percentile of weekly earnings for full-time salaried workers ($921 per week, or $47,892 annually).”

Should this proposal be adopted, employees—white collar, blue collar or no collar—who earn less than $47,892 annually will be entitled to overtime pay no matter what. This is a significant upward departure from the current salary threshold, and is an additional hurdle to the other constituent tests employers must satisfy to demonstrate their employees are “bona fide” executive, administrative or professional employees. This means that even if an employee performs traditional “white collar” duties, the employee will be entitled to receive overtime pay if that employee earns less than this new, heightened salary minimum.

For example, under Section 13(a)(1) of the FLSA, as defined by its Regulations, 29 CFR Part 541, to qualify for the administrative employee exemption—in addition to the salary requirement—an employer must show that the employee primarily performs office work directly related to the management or business operations of the employer or the employer’s customers, and that “the employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.” So, in addition to an employer proving that an employee is a bona fide administrative employee, the employer also must pay that employee at least $47,892 in annual salary to exempt the employee from receiving overtime pay.

Importantly, the DOL’s proposal also includes a mechanism “for automatically updating the salary and compensation levels going forward to ensure that they will continue to provide a useful and effective test for exemption.” As a result, the DOL projects the new annual salary floor would increase to $50,440 in 2016.

Additionally, the DOL has proposed an increase to the total annual compensation requirement needed to exempt highly compensated employees “to the annualized value of the 90th percentile of weekly earnings of full-time salaried workers,” which would be $122,148 annually if made effective immediately.

Employers should start planning for these new salary increases, as well as the resultant increases in the number of employees who will be entitled to receive overtime pay. With this new regulatory change on the horizon, employers should not delay in auditing their personnel by reviewing their current workforce composition and determining which employees classified as exempt will remain exempt—or become non-exempt—under these new regulations.

Furthermore, while many state wage and hour laws closely track or follow the FLSA, employers must remain mindful of the differences between the FLSA and their own state’s wage and hour regulations. For example, while the current requirements of Pennsylvania’s Minimum Wage Act, 35 P.S. § 333.101, etseq., and regulations at 34 Pa. Code § 231.1, etseq., and New Jersey’s Wage and Hour Law, N.J.S.A. 34:11-56a, etseq., are substantially similar to the current federal standards, employers must ensure compliance with both federal and applicable state wage and hour laws where there is any difference or deviation between the two.

Notably, the FLSA, 29 USCS § 218 (and its regulations at 29 C.F.R. Part 541.4) provides that federal law does not affect the enforcement of state overtime requirements. Employers should know that whichever law, state or federal, provides the greater benefit and protection to its employees will be the one enforced.

In conclusion, employers concerned about these anticipated changes to the framework of the FLSA would be wise to consult with their employment counsel to ensure compliance not only with these new federal regulations but, additionally, to review and ensure compliance with all applicable state laws.